The Medicare Safety Net: How Your Sessions Get Cheaper Later in the Year

Once your out-of-pocket costs pass the Extended Medicare Safety Net threshold, Medicare pays 80 per cent of the gap for the rest of the calendar year. For most people using their full course of rebated sessions, that means the later appointments cost a fraction of the earlier ones.

The Medicare Safety Net is the part of the funding system almost nobody mentions before you book, and it makes a substantial difference to what a course of therapy actually costs. Once your out-of-pocket costs for the year pass a threshold, Medicare starts paying 80 per cent of the gap on every further eligible service for the rest of the calendar year.

In practice, that means your first few sessions cost what you expect and the later ones cost far less. If you are working through a Mental Health Treatment Plan referral, most of the sessions on it are likely to fall on the cheaper side of that line.

How it works

There are two safety nets, and they do different things. Both run on the calendar year and both reset on 1 January.

• The Original Medicare Safety Net (OMSN) lifts the Medicare benefit for out-of-hospital services from 85 per cent to 100 per cent of the schedule fee once your gap costs for the year reach $594.40
• The Extended Medicare Safety Net (EMSN) is the one that matters most for psychology. Once your out-of-pocket costs for the year reach the threshold, Medicare pays up to 80 per cent of any further out-of-pocket costs for out-of-hospital services on the MBS

Out-of-pocket cost means the difference between what you pay and the Medicare benefit you get back. For a session with one of our Clinical Psychologists that is $160.95, and for a Registered Psychologist it is $188.45.

The 2026 thresholds

• Original Medicare Safety Net, everyone: $594.40 in gap costs
• Extended Medicare Safety Net, concession card holders and families receiving Family Tax Benefit Part A: $861.20 in out-of-pocket costs
• Extended Medicare Safety Net, everyone else: $2,699.10 in out-of-pocket costs

Both EMSN thresholds are indexed on 1 January each year in line with the Consumer Price Index, so the figures above are the 2026 amounts and will change in January.

What that looks like with our fees

Take a concession card holder or a family receiving Family Tax Benefit Part A, with an $861.20 threshold, seeing one of our Clinical Psychologists on a Mental Health Treatment Plan.

• Sessions 1 to 5 cost $310 with a $149.05 rebate, so $160.95 out of pocket each, and $804.75 in total
• Somewhere in session 6 the threshold is crossed
• From then on Medicare pays 80 per cent of the $160.95 gap, which is about $128.76, bringing the out-of-pocket cost down to roughly $32.19 a session

For a Registered Psychologist at $290 with a $101.55 rebate, the gap is $188.45, so the same threshold is crossed during the fifth session and the out-of-pocket cost afterwards falls to roughly $37.69. Across a full course of ten rebated sessions in one calendar year, that is a large difference to the total.

One qualification worth stating. Some MBS items carry an EMSN benefit cap, which sets a maximum EMSN benefit for that item, and where a cap applies Medicare pays whichever is lower, 80 per cent of your gap or the cap amount. We are happy to confirm what applies to the specific item numbers you will be claiming before you start.

The general threshold, and why families reach it faster

The general threshold of $2,699.10 is higher than a course of psychology alone will usually reach, because ten rebated sessions with a Clinical Psychologist come to about $1,609.50 in gap costs. What makes it reachable is that every out-of-pocket cost for out-of-hospital MBS services counts, not only psychology.

• GP appointments that are not bulk billed
• Specialist consultations, including paediatricians and psychiatrists
• Out-of-hospital imaging and pathology
• Other allied health services delivered under an MBS item
• The costs of everyone in a registered Medicare Safety Net family, combined

That last point is the one families miss. If you are an individual, Services Australia registers you automatically and applies the higher benefit as soon as you cross the threshold. If you are a couple or a family, you have to confirm who is in your family with Services Australia before you reach the threshold, otherwise the costs are counted separately rather than pooled.

How to check where you are up to

• Sign in to myGov and open your Medicare account, where your safety net balance is listed
• Use the Express Plus Medicare app
• Call Services Australia on 132 011 and ask for your current safety net balance

Only verified costs count, which means you need to have paid the fee before you claim. Because our clients pay the full fee at the appointment and Medicare refunds the rebate afterwards, our sessions count towards your threshold as verified costs.

What does not count

The safety net only applies to services with an MBS item number delivered out of hospital. That rules out a few things people reasonably expect to be included.

• Psychological and cognitive assessment, including ADHD, autism, giftedness and educational assessments, which are not rebatable under Better Access and therefore do not count towards any threshold
• Sessions with a Provisional Psychologist, which have no Medicare item
• NDIS-funded services
• Anything you claim through private health insurance rather than Medicare
• In-hospital services

How this fits with your referral

Two rules run alongside each other and it is easy to confuse them. Your Mental Health Treatment Plan referral does not expire, but the Medicare rebate covers up to ten individual sessions per calendar year, and that count resets on 1 January. The safety net also runs on the calendar year.

So the practical picture is that your out-of-pocket costs are highest early in the year and lowest late in it, and both counters go back to the start in January. If you are planning a course of work, it is worth knowing that the sessions you use later in the same year are the cheap ones.

Key voices to follow online

A lot of the useful commentary on Thriving Kids is happening on LinkedIn ahead of the official updates, and these are three accounts worth following if you want to track how the reform develops.

• Chantelle Robards on LinkedIn
• Trystan Conway on LinkedIn
• Dr Fiona Martin on LinkedIn

Where to read it yourself

• Medicare safety nets - Department of Health, Disability and Ageing
• Extended Medicare Safety Net - Services Australia
• Medicare Safety Net arrangements from 1 January 2026 - MBS Online
• Fees and funding at Ivy Psychology

In summary

The Extended Medicare Safety Net means that once your out-of-pocket costs for the year reach $861.20 on a concession card or with Family Tax Benefit Part A, or $2,699.10 otherwise, Medicare pays 80 per cent of the gap on eligible services for the rest of the calendar year. For therapy at our fees that takes a session from around $161 down to around $32. Assessments do not count towards it, families need to register to pool their costs, and everything resets on 1 January.

If cost is what is standing between you and starting, say so. Ask us about our reduced fee options. We are committed to making psychological therapy and assessment accessible.